Gideon Greenspan, a computer scientist and CEO/Founder of the Israeli startup Coin Sciences, joined us for a discussion of their private blockchain platform MultiChain. Besides diving into the popular question of what's the point of a private blockchain, we covered his earlier colored coins implementation as well as his view that blockchains are best understood as a novel database paradigm.

Topics covered included:

How Gideon got involved in the blockchain space

Their colored coins implementation MultiSpark and why it failed to get traction

Why he saw a market for an open-source private blockchain platform and started MultiChain

What mining diversity is and how it is used for consensus in MultiChain

How permissions work in MultiChain

The issues of privacy in blockchains and why you can't have auditability and privacy

In May,Bitcoin Magazinereportedthat blockchain-based Governance 2.0 initiative Bitnation is developing a collaborative platform for DIY Governance based on the blockchain.

“Bitnation is a Governance 2.0 Operating System, designed to disrupt the nation-state oligopoly through offering more convenient, secure and cost-efficient governance services,” said Bitnation founder and CEO Susanne Tarkowski Tempelhof.

Bitnation is one of several emerging initiatives to empower connected global citizens with a growing range of options to bypass legacy governance systems based on nation states. The e-Residency program launched by the government of Estonia is another such initiative.

The program offers anyone, anywhere, a digital identity issued by the Estonian government and the possibility to start and operate a business online under Estonian regulations. The foreigners who become e-residents of Estonia are not automatically entitled to physical residency in the small Baltic state, but they can base their online financial life there.

Estonia, a country at the forefront of modern e-government, has been offering efficient online services to its citizens for more than a decade.

“By offering e-residents the same services, Estonia is proudly pioneering the idea of a country without borders,” proudly states the e-residency website. In particular, e-residents can digitally sign, verify and encrypt documents and contracts, establish an Estonian company online in 24 hours with a physical address in Estonia provided by an external service, and administer the company from anywhere in the world.

Currently, establishing an Estonian bank account for the company requires one in-person meeting at one of the banks that recognize e-resident smart ID cards – currently LHV, Swedbank and SEB – but once the account is established e-residents can manage e-banking and remote money transfers from anywhere in the world.

An appealing feature of e-residency for entrepreneurs is that, in Estonia, company income is not taxed. Therefore, compliance is simplified and all income is available for re-investment. However, since e-residency doesn’t imply tax residency, e-residents are supposed to pay taxes at home for the money that they take out of the company.

Now, the Estonian government is partnering with Bitnation to offer a public notary service to Estonian e-residents based on blockchain technology.

“Via the international Bitnation Public Notary, e-residents, regardless of where they live or do business, will be able to notarize their marriages, birth certificates, business contracts, and much more on the blockchain,” states a joint press release.

"I'm delighted to work with Estonia's e-residency program to set a standard practice of competition of governance services on a global market, and to enable others to exercise self-determination and follow Bitnation's path to sovereignty,” said Tarkowski Tempelhof in the press release.

“The Republic of Estonia is on the forefront of innovation when it comes to e-governance,” Tarkowski Tempelhof told Bitcoin Magazine. “They’re mostly young and open-minded, eager to test new technologies to improve their services. Additionally, their processes are quite streamlined, which is original for being a government, and needless to say, very refreshing.”

If a couple gets married on the public notary, it doesn’t mean they get married in the jurisdiction of Estonia, or in any other nation state jurisdiction, notes the press release. Instead, they get married in the “blockchain jurisdiction.”

International Business Timesnotes that, besides marriages, blockchain technology can provides a worldwide legally binding proof of existence and integrity of contractual agreements for things such as banking, incorporating companies quickly and cheaply and generally empowering entrepreneurs and citizens around the world.

"In Estonia we believe that people should be able to freely choose their digital/public services best fit to them, regardless of the geographical area where they were arbitrarily born,” said e-Residency Program Director Kaspar Korjus. “We're truly living in exciting times when nation states and virtual nations compete and collaborate with each other on an international market, to provide better governance services."

In fact, the importance and potential impact of the Estonian government’s move shouldn’t be underestimated. Here we have the government of a nation state, a full member of the European Union, acknowledging a virtual nation as a legitimate partner for the development and gradual implementation of next-generation governance services.

“My aim is to see a world where hundreds of thousands or millions of governance service providers in a free global market competing through offering better services at a better value, rather than through the use of force within arbitrary lines in the sand,” Tarkowski Tempelhof told Bitcoin Magazine. “To that end, seeing nation state governments starting to provide governance services on a free global market as well, like The Republic of Estonia, is encouraging, and a step in the right direction. Now we need more nation state governments, as well as open source protocols joining the global market.”

Tarkowski Tempelhof added that, realistically, it’s more likely that small nations will adopt the technology in the short term.

“Countries and city states that come to mind are Singapore, Lichtenstein, Andorra, etc.,” she said. “We’re also likely to see nations in the developing world leapfrogging in terms of governance technologies.”

It's the usual tropical season here in Chennai, India, but this year is not like any other. Rain brought floods and chaos, causing the city to float. The continuous rain for the past month has surpassed all the odds and brought a halt to the usual life.

Too much rain, too little space

The state of Tamil Nadu has received 485 mm of rain so far. The amount already exceeded the seasonal average of 438 mm. Further rain is expected around the corner as more storms are yet to move to the shore. In November alone, the state has received 352 mm of rain, which is more than twice the monthly average of 170 mm. The city of Chennai has received 1186 mm of rain in the month of November, which is three times the monthly average of 407 mm. On five occasions this month, Chennai recorded three-digit, 24-hour rainfall. The greatest amount of 265 mm fell between November 15 and 16, according to the skymetweather.

Rain, rain, go away

The impact of the rain has been devastating. Water levels in the far part of the city rose, causing all the streets to flood. People, buildings, cars, and animals all wore swim suits, as the water reached knee level, with no where to drain. In addition, water-logged roads and subways made it hard for people to come out of the house.

To worsen the situation, sewer lines mixed with the drinking water, making people ill. Some of the flooded areas had no drinking water or electricity and people were scared to see water snakes and reptiles floating in the water. The rainy streets were filled with sorrow, as there were some causalities due to the open electric wire on the street, causing the electrocution of a few animals and people. The rescue department went into action and nearly 55,000 people in Chennai and in the neighbouring areas were shifted to safer locations.

Help on the way

NGOs, the government, and fire department rescue teams have sprung into action, helping people in different areas. People distributed food packets and clean water to affected areas. Boats with professional rowers were brought in to move people quickly to dry land. The taxi service Ola offered free boat service for affected areas as part of the mission.

Changecup India, with the help of ChangeTip, collected funds from kind-hearted people to donate to World Vision India to help clean up Chennai. Thanks to bitcoins, financial help was almost instant for donating at the right time.

Whether the effects of the rain were caused by environmental damage or natural wrath is debatable. One thing is for sure. During times like this, people should hold hands to aid and help fellow humans. A technology like bitcoin can also give a hand. I believe in bringing a change, one that is here for good and for the long run. A change for humanity.

Feel free to browse my GitHub open-source Bitcoin projects. Tip this blog or my other work on ChangeTip.

Netki, a service aimed to simplify bitcoin payments, has officially released a beta of their Google Chrome browser extension, allowing customers to use email-esque Wallet Names such as ‘wallet.justin.me ‘ instead of lengthy 32 character public addresses. Netki users can now enter their Wallet Name anywhere on the web, and the extension will automatically replace the name with the appropriate public wallet address. They currently support bitcoin, litecoin, dogecoin, Factom (Factoids and entry credits), and Ether, among others.

Their new extension will allow Netki users to maintain their anonymity and save time across nearly any web-based blockchain application, including wallets such as Coinbase, Blockchain, and Uphold, exchanges like Kraken, Bitfinex, and CEX.IO, and other applications such as Fold and Purse.io.

The extension is available for free on the Chrome Web Store. And while an individual Wallet Name is available on Netki’s website for as little as $1.95 a year, ChangeTip users are given one for free. If you’d like to try the extension, sign up for a ChangeTip account on their website, navigate to the ‘Tips’ tab on the top left of the page, and activate your personalized Wallet Name by clicking on the personalized URL under the ‘Tip.me Page’ header on the left side of the page. Your new Wallet Name will be tied to the deposit address for your ChangeTip account, which you can use anywhere on the Internet with the new extension.

Netki, started in 2014 and described by many as the “DNS for Bitcoin,” has already partnered with companies such as ChangeTip, Gem, and Snapcard, whose users are automatically registered and given a personalized Wallet Name.

However, their ambitions are much larger. Wallet Names will allow individuals to remain ‘pseudo-anonymous’ on the public blockchain, mitigating serious privacy concerns for those whose real-world identities become associated with single, static public addresses.

In addition, Netki also built in support for Hierarchical Deterministic or HD Wallets, which allow users to automatically create a unique public address for each transaction related to a single Wallet Name. HD Wallets, when combined with Netki’s Wallet Name, can help individuals maintain anonymity on the blockchain without the hassle of managing dozens of public addresses.

Netki CEO Justin Newton also hopes their new extension, combined with individualized Netki Wallet Names, will allow new users to more easily understand and use bitcoin online.

“We are excited to release this Chrome extension as it now allows users to send using Wallet Names at all web-based blockchain and bitcoin services.," Newton said. "This is a significant step forward in the usability of blockchain technology to ensure easier mainstream market adoption.”

Slush Pool, a Czech-based Bitcoin mining pool accounting for 6 percent of hashing power on the Bitcoin network, indicates it will re-enable connected miners to vote for a block-size increase through BIP (Bitcoin Improvement Proposal) 101. Slush Pool was the first mining pool on the Bitcoin network to allow miners to vote for BIP 101, but recently suspended this option due to sustained DDoS attacks on its servers.

The block-size dispute might reach a critical juncture over the next weeks, with the upcomingScaling Bitcoin workshop in Hong Kong in the first week of December, and the stated intent of severalprominent Bitcoin companies to change their code to allow for bigger blocks that same month. As such, Bitcoin miners (and pools) might be faced with an important decision as to which code they will support.

Palatinus said that the effort to re-enable miners to vote for bigger blocks is unrelated to this “December deadline,” however.

“We're not focused on December with our decision, but we still think the block-size limit should be increased,” Palatinus explained. “Sometimes there are already blocks full of valid transactions, and there's not any particular reason why user experience with bitcoin transactions should be limited because of an arbitrary limit of 1 megabyte.”

He added, “We're close friends to Paralelni Polis, the first – and only? – bitcoin-only cafe and co-working space, located in Prague near our offices. We have real-world experience with day-to-day bitcoin transactions of common users. We also see issues related with transactions not going through the Bitcoin network and how it affects bitcoin acceptance. For this reason we consider this an urgent issue.”

BIP 101 – which is implemented in alternative Bitcoin implementation Bitcoin XT – is programmed to increase the maximum block size to 8 megabytes if a threshold of 75 percent of mining power accepts the change. Once activated, this limit is set to double every two years. Much like before, however, Slush Pool does not intend to force connected miners to vote for a BIP 101 block increase with their hashing power. Instead, individual miners will be given the option to cast such a vote if they want to.

“We personally hope BIP 101 will be adopted, but we do not want to enforce BIP 101 mining on our pool,” Palatinus said. “We believe in open discussion and democracy. For this reason we want to tell our miners about all options, explain their pros and cons, and let them individually decide by their mining vote.”

BIP 101 has received criticism within the Bitcoin development community, the main concern being that its exponential growth curve might lead to oversized blocks. While an increased block size would allow for more transactions on the Bitcoin network, “Decentralists ” fear that oversized blocks could further centralize mining and full nodes – in turn, potentially harming Bitcoin's censorship resistance.

Palatinus, however, believes the risks of BIP 101 are being exaggerated, explaining:

“Improved block compression solutions will be able to vastly decrease the risk of oversized risks in regard of centralization of mining. Additionally, Bitcoin's blockchain file is impractically big for common use already. Normal users don't run Bitcoin Core anymore, because there are many other easier and more user-friendly solutions for managing bitcoin than Core. For those who want to have a full copy for any reason, there won't be a much bigger difference.”

One alternative block-size proposal that has been gathering support is an incremental increase to 8 megabytes over four years time. Proposed as a temporary solution by Blockstream CEO and hashcash inventor Dr. Adam Back, this “2-4-8” option seems acceptable to a significant segment of the Bitcoin Core development team, as well as prominent industrymembers.

When asked by Bitcoin Magazine about the 2-4-8 quick fix, Palatinus said: “This will only move the same discussion to the future, not solving the real issue. However as a temporary solution – possible.”

There are only two things that come second to my wife and family '" GetGems and The LTB Network.

But everything has to start somewhere. At school, I liked reading better than playing sports, probably because I couldn't see past my arm, and I really needed glasses, but didn't find out until grade 3.

Reading eventually became writing and turned into my passionate interest in journalism in the early 1960s. School paper, local community weekly newspaper, and a few features in the larger metro rags. By the time I was 21, I knew everything, so I moved on to science fiction.

By the time I was 30, I had earned a reputation for knowing very little about everything, and I wore my "general specialist" T-shirt with pride.

The science of the future helped me develop an obsession for the rapid growth in technology.

My family kept growing too, and in 1984, when a TV ad for the Apple Macintosh computer iconified the promise of a future free from tyranny, I bought it '" hook, line, and sinker.

The 28th of November, my birthday, has had the same energy for me every year. In addition to adding a number to my age, I get a chance to "come out" a little bit more, because the joy of getting older is that what others think of you just doesn't make a difference to what's important. Including my current fixation with the creation and ongoing development of the Bitcoin blockchain.

Most of the people I work with are half my age. In Bitcoin, we are all driven by the humbling thought that we are just a few steps closer to realizing our full value, both as individuals and as contributing members of the human tribe. In the 1960s (yes, I was a hippie), we thought we could win with peace and love alone. We were wrong. The missing ingredient for true long-term success was money for everyone.

In 2012, after four depressing economic years, I became aware of a way that we could all regain hope. The Bitcoin blockchain, an idea that simply worked, is now the greatest invention of the past two decades. Move over Apple.

I made a choice early to follow Bitcoin, the strongest protocol, and ignore the thousands of other "tech-wanna-babies" that also spawned from Satoshi Nakamoto's white paper. If you have not, please read it.

In 2013, I started listening to Adam B. Levine's podcast, and I thought it would be very cool to get to know him and offer some of my experience to help out where I could. From thousands of listeners, a small group gathered regularly to read and comment on his work. Adam bore a faint resemblance to an easy-going cult hero I had known in my younger years, and he attracted smart people with good intentions, which made a great combination.

The Let's Talk Bitcoin podcast has been and continues to be a source of inspiration and a conduit to many of the other pieces of the puzzle. As a student, volunteer, advisor, and now Sales and General Manager at the LTB Network, this is the best year of my life.

Here, I met all the great people we have on staff '" Cheryl, Jeff, Nick, and Devon, and until recently Tuomas. Without Tuomas, I would probably not have asked the very tough questions. I thank him every day for that. Of course, without Steven and Denise there would be no Adam, so kudos to them both for that.

And for well over a year I have had the privilege of working with a team in Israel, and Daniel Peled, CEO and visionary of GetGems. You will hear a lot more about GetGems very soon and I am proud to have played a part in its success.

Like most of the people involved in cryptocurrency, I know a lot of interconnected projects and people. Each of the projects has at least one technical guy or gal, who sometimes might also be the marketer and the bookkeeper. Often the groups are small, made up of four to eight. As the projects flourish, they begin to swallow up those with the keenest sense of what the future might hold. In the past three years, I have had the honour to speak with hundreds of people who really want to make things work.

Bitcoin is my conduit to the fountain of youth. Sure, my trainer-wife will kick my butt to make sure I get enough exercise so I can keep up with the kids, but the drive for a better world is coming from key people in this Bitcoin space, and it provides me with all the energy I need to run fast.

In this Episode

History in the making. Exaggeration? You be the judge. This last week Daniel DaBek announced the release of the whitepaper on the new Safe Exchange. More than just a protocol, it is the core tool kit necessary to establish a decentralized contract marketplace, via which anyone will be capable of exchanging with anyone, anywhere, according to prearranged contractual conditions.

We discuss the current crowdsale, designed to raise the modest capital needed to finish development, but also to distribute governance of the exchange a much as possible amongst the future users of it.

This is one you really don't want to miss. It will change your vision of how things can be when "Free Trade" is more than just a political buzzword.

Magic Word

Listen for the magic word, and submit it to your LetsTalkBitcoin.com account to claim a share of this week's listener award distribution of LTBcoin. Listeners now have a full week from the release date to submit a magic word. The magic word for this episode must be submitted by 5 pm Pacific Time on December 5, 2015.

Music

Music for this episode: Arrivals and Magic Word, original pieces, composed and performed by Nicholas Koteskey of Two Faced Heroes

On Episode 268...

Earlier this month I put on a suit and headed to San Francisco for the Future of Digital Currency and Blockchain conference. Today i'm pleased to bring you the first two talks from that event.

If you've educated yourself about Bitcoin on the internet, chances are good you've run across James D'Angelo and his long running series of educational videos. We end todays episode with his talk Bitcoin Governance: The Decentralization Myth.

But first, Economist Garrick Hileman sits down with Brian Forde for a wide ranging talk on cryptocurrency trends, where we've been and where we're going.

On today's show we have a panel of Devcon attendees. Alex Amsel, Hudson Jameson and Jack du Rose. We discuss the Ethereum community, the development state of the consensus process, storage solutions, Free My Vunk, Slock, Oraclize and much more.

We start the show off with an interview of Evan Duffield of Dash, formerly known as DarkCoin.

Then we're joined by John Kiriakou, the former CIA agent charged with espionage for his role in exposing torture by the CIA. Water boarding, secret prisons and FBI frame jobs, creating terrorist who were never there before the FBI created them. I highly recommend checking out the documentary Silenced on Netflix.

We start the show off with an interview of Evan Duffield of Dash formerly known as DarkCoin.

Then we're joined by John Kiriakou, the former CIA agent charged with espionage for his role in exposing torture by the CIA. Water boarding, Secret Prisons and FBI frame jobs creating terrorist that were never there before the FBI created them. I highly recommend checking out the Documentary "Silenced" on Netflix.

The StartUp Show Notes

Walter Cole of Stella Monro' and The Aural Tree talks about the services of each of his companies. We have a pretty extensive discussion about marketing on social media and how to be effective. He shares insights that will help other entrepreneurs.

Credits for The StartUp #5

The first musical selection was entitled 'The Green Eye Theory'. The Latin tune 'We Should Do This Again Sometime' was played during the magic word segment. Walter Cole composed both of these tunes.

With Mike Hearn taking a step back from Bitcoin development to work for private blockchain startupR3, former Bitcoin Core lead developer Gavin Andresen indicated he might take over the lead of Bitcoin XT, the Bitcoin implementation programmed to increase the block-size limit through BIP (Bitcoin Improvement Proposal)101.

Andresen, who shifted his efforts to Bitcoin XTearlier this year, toldBitcoin Magazine, reluctantly: “I might take over lead of XT, but I don't want to.”

It was announced last week that Hearn recently joined R3 as lead platform engineer, where the Google veteran and Bitcoin XT lead developer will work with some of the world's largest banks on distributed ledger-based protocols for global financial markets. Hearn confirmed to Bitcoin Magazine that he will do the minimum required to keep Bitcoin XT running, but won't actively develop or advocate the implementation any longer.

Hearn, a staunch advocate of a block-size increase in order to allow for more transactions on Bitcoin's network,implemented BIP 101 into Bitcoin XT this summer. With this patch, designed by Andresen, Bitcoin XT is set to increase the maximum block size to 8 megabytes if a threshold of 75 percent of mining power accepts the change. Once activated, this limit is set to double every two years.

The implementation of BIP 101 in Bitcoin XT without industrywide consensus was considered controversial by many, in particular among the Bitcoin development community. Shortly after Hearn implemented the patch, however, severalprominent Bitcoin companies stated their intent to upgrade their code to support BIP 101 by December of this year. As such, the timing of Hearn's departure could have been experienced as unfortunate by supporters of a rapid block-size increase. While the Bitcoin industry could still adopt Bitcoin XT, this seems unlikely with no active lead development.

Success of Bitcoin XT might therefore depend on Andresen taking over as lead developer, Hearn acknowledged when asked by Bitcoin Magazine. This idea – which was previously advocated by Coinbase CEO Brian Armstrong – was not dismissed by Andresen, though he is not keen to take such a step. Andresen, who is currently on MIT's payroll, explained:

“I might take over lead of XT, but I don't want to. I stepped back from lead of Core because I got tired of the constant trivial decision-making needed to lead an active open source software project. I want to spend my time thinking about and working on bigger, longer-term issues; like: 'What are the benefits and risks of increasing the maximum block size?'”

BIP 101 itself currently garners little support among the Bitcoin development community, and seems very unlikely to be implemented in Bitcoin Core. Regardless, Andresen does expect that BIP 101 might be adopted by the industry at large. Either through Bitcoin XT, or by miners, companies and other users implementing the patch in their own software.

“It depends on what comes out of the big Hong Kong meeting,” Andresen explained. “If the other developers can't make up their minds and reach consensus on a solution, then we'll have a messy, chaotic couple of months where companies and big mining pools or miners pick sides until a solution emerges. Though, in that case, I do expect that the most likely solution will be BIP 101, since it is the only solution with well-tested code they can download and run.”

Tipping Point shows the world the potential for bitcoinas a tool for positive change. Before the advent ofcryptocurrency, we couldn't imaginethat we'd one day be able to sendmicropayments to any individual on the planet. While the media lovesto emphasize the scandals and negative aspects of decentralized value transfers, a growing movement ofpeople are ignoring the sensationalism and getting to work,using tipsto bringfood, medicine, and other basic essentials to people in need '”from anywhere, to anywherein the world.

Bitcoin unites us in a way that no other form of electronic communication has done before, making it possible to extend our reach beyond simply liking and upvoting of online content, to making a real difference in people's lives. Charities and causes benefit from this technology simply by creating a free wallet and adding a QR code or hyperlink to their websites. We are erasing the boundaries and limitations of traditional fundraising, and it's our hope that as more people begin to see the advantages of using bitcoin tips as a force for good, the network effect will become unstoppable, bringing us to a "tipping point" of widespread adoption.

Coinbase hasintroducedthe first U.S.-issued bitcoin debit card, the Shift Card, in partnership withShift Payments. TheShift Card is a Visa debit card that currently allows Coinbase users in 24 states to spend bitcoin both online and at physical points of sale at more than 38 million merchants worldwide.

“Merchant adoption has come a long way over the past few years, but it’s still difficult for people to make regular purchases with bitcoin,” notes the Coinbase announcement. “Buying gas at a local gas station or groceries at a neighborhood grocery store with bitcoin has not been possible in most cities in the U.S. Thanks to Shift Payments, it’s now possible to use bitcoin to buy gas, groceries, and much more. With the Shift Card, you can now spend bitcoin anywhere in the world that Visa is accepted.”

Coinbase users living in the states where the service is available can order a Shift debit card for $10 and link it to a Coinbase wallet. When the Shift debit card is used to make a purchase, the equivalent value of bitcoin (based on the current spot price of bitcoin on Coinbase) is debited from the user’s Coinbase bitcoin wallet. For certain transactions, such as gas purchases and dinner bills, Shift will debit more than the purchase amount, and refund the remainder to the user when the final payment amount is settled.

There are no annual fees, no bitcoin-to-dollar conversion fees, and no domestic transaction fees. Coinbase says there are no domestic transaction fees “for a limited time,” which seems to indicate that domestic transaction fees could be added in the future. There is a $2.50 ATM fee and a 3 percent international transaction fee. The daily ATM withdrawal limit is $200, and the default daily spending limit is $1,000.

The card isn’t available to users in New York, Florida, and many other states. Coinbase and Shift Payments say that they are working through legal and regulatory matters in the states where the Shift Card is not yet available.

Shift Payments wants to integrate all payment options available to a user in one debit card. Users can connect a Shift Card to multiple accounts to seamlessly spend all supported payment means, including digital currencies, with the same card.

The Shift card isn’t the first bitcoin debit card, but the availability of a Visa-branded bitcoin debit card from a major bitcoin exchange and wallet operator is likely to represent a quantum leap in the space.

“At the end of the day, what we’re trying to do is make bitcoin easy to use,” Coinbase vice president of business development and strategy Adam White, told Wired. “We want to make it easy to buy and sell bitcoin, and we want to make it easy to spend. A mainstream debit card based on bitcoin is a key element.”

Of course all U.S. bitcoin users already can spend their bitcoin by converting them to dollars and sending the dollars to their bank accounts, but the process is lengthy and probably overly complex for some users.

Therefore, the Shift Card is likely to make Bitcoin much more useful in daily life.

Wired notes that existing Coinbase customers are now likely to start spending more of their bitcoin, rather than just speculating, and new customers will be attracted to the digital currency because they can more easily spend it. Then, merchants will be more motivated to start accepting bitcoin, which could start a runaway feedback loop that will boost the Bitcoin ecosystem.

As the bitcoin price has risen out of the $200’s over the past month, the price increase has driven another important event: more mining hardware is being brought online.

Miners earn revenue two ways. The first is with the block reward, which is 25BTC approximately every 10 minutes. The other way is with transaction fees. The block reward also acts as the mechanism in which new supply of bitcoin is generated. Because mining tends to reward those that can do the most work, miners deploy increasing amounts of hardware to try to be the first to mine each block. To keep a steady block creation rate, Bitcoin creator Satoshi Nakamoto put in place a rule that updates the network difficulty every 2016 blocks, or approximately two weeks.

According to Bitcoin Wisdom, the difficulty increase that took place today rose by 10.44%. The last time the difficulty increased by more than 10 percent was on November 5, 2014, when the difficulty increased by 10.05 percent. Further, Bitcoin Wisdom is predicting that the next bitcoin difficulty increase in 2 weeks will be 10.25%. The last time there were two double digit percentage increases in difficulty was August 19, 2014 and August 31, 2014.

But the increase in difficulty makes sense.

The next generation of bitcoin miners have been released by three of the top companies in the space. In August, Bitmain announced the launch of the Antminer S7, which contains the BM1385 ASIC. Each S7 can generate upwards of 4,850 GH/s while only using 0.25 J/GH of power.

In October, the Chinese mining firm BW announced that it was releasing its next stage bitcoin miner, which would contain a 14nm chip. Virgilio Lizardo Jr., head of international at Bitbank, told Bitcoin Magazine that the first batch of servers released would be 48 petahash total. For context, the current network has a hash rate of 550.5 PH/s.

Finally, the original creator of the ASIC miner, Avalon, announced that it was releasing its latest miner, the Avalon6, which would contain the new A3218 mining chip. Each miner would be able to generate 3.65 TH/s of hashing power. While these new miners have just hit the market, it is additional hardware that should come online over the coming weeks.

The reality is simple: As the price of bitcoin increases, the number of people who can make a profit mining increases. That encourages more participation in securing the network, which results in the need for a difficulty increase. As these next generation of bitcoin miners come online, it is expected that the difficulty will continue to counteract the additional hash rate in the network.

Jacob Donnelly is a freelance journalist and a consultant in the bitcoin/blockchain space. He runs a weekly digital currency and blockchain newsletter called Crypto Brief.